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Staff photo by Allison Potter.
To remain navigable, some shallow-draft inlets like Carolina Beach Inlet, pictured above, must be regularly dredged. Rep. Ted Davis Jr. led an effort to secure funds for inlet dredging in a 2014 law passed by the N.C. General Assembly

Local lawmakers divided on room occupancy tax law

A House bill allocating a portion of unused room occupancy tax collected in New Hanover County raised concerns after changes to the bill’s language might put the funds in different hands than intended.

The bill was sponsored by Rep. Ted Davis Jr., R-New Hanover, in pursuit of a funding source for local matches needed to receive state assistance for shallow-draft inlet dredging. Davis identified more than $1 million of room occupancy tax collected in unincorporated parts of the county that were earmarked for beach renourishment in those areas yet untapped because no beaches needing renourishment exist in those areas.

The bill originally intended to earmark that funding stream for inlet dredging but when it was considered by the legislature, language in the bill changed to bring it into compliance with state ROT guidelines.

Under the change, all proceeds from the room occupancy tax collected in unincorporated areas will be managed by the New Hanover County Tourism Development Authority, with two-thirds of funds collected after July 1, 2014 earmarked for tourism promotion and one-third earmarked for tourism-related activities.

Davis was able to secure the $1 million previously accrued for tourism-related activities.

Rep. Rick Catlin, R-New Hanover, questioned the bill after he heard concerns from Figure Eight Island, part of the district he represents, but the bill was ratified July 25, when it become Session Law 2014-87.

Catlin is worried that the law as passed does not specifically allocate the funds for inlet maintenance.

“That’s my fundamental problem. I’m very concerned about losing that million dollars that if we had more time, I think we could probably be able to allocate it all to unincorporated inlet maintenance. Once this is done, I don’t know if we’ll ever be able to get this money back from the TDA,” Catlin said during a July 30 phone interview.

“Now the TDA will oversee it, and nothing at all against the TDA, it’s just there’s no guarantee that it will come back to the unincorporated waterways,” Kellam said during a July 30 phone interview.

Kellam said he sees all of the county’s inlets and waterways as essential to tourism.

“We’re not trying to get the funds at this time for Figure Eight, in any way, shape or form … but rather we want them to be used for the benefit of inlets throughout the county. I see that being able to operate boats safely in and out of inlets, and people being able to go enjoy the inlets and recreate in and around them as they do, is a major component of recreation, travel and tourism in this area,” Kellam said.

Davis said during a July 28 phone interview that a pending memorandum of agreement between the tourism development authority and beach town governments will ensure money allocated for tourism-related activities will be used for inlet dredging.

Both Catlin and Kellam said they would be comfortable with the bill if the agreement is signed.

“If [Davis] is able to do that, that’ll be successful. But we passed the legislation without that being in place, which was my concern,” Catlin said.

“I’m glad to hear that Rep. Davis is working with the TDA to come up with the best solution, so we may very well get to a positive outcome on this, and I hope we do,” Kellam said.

Kim Hufham, president and CEO of Wilmington and Beaches Convention and Visitors Bureau, said she expects the TDA to consider the agreement during an August meeting. An informal poll conducted early in the process showed the TDA in full support of using inlet dredging as the language included in the bill, but she said the board will ultimately make the decision to support an agreement.

“I cannot speak for the TDA on that because I have not spoken with any of them. We haven’t even seen an agreement yet. I know the county is working on one,” Hufham said during a July 30 phone interview.

Regardless of how the agreement plays out, Catlin plans to revisit state guidelines on room occupancy tax collection and use during the 2015 long session. He said the guidelines were created when more federal funds offset beach maintenance costs, and facing dwindling federal support, the rules should be changed.

“Finding a way to use that unincorporated fund in the room tax would have been a step in the right direction but overall, in the long session, it’s one of my intents to really look at revisiting the standards so that we have more flexibility for our coastal areas for use of our room tax,” Catlin said. “You could spend all the money on tourism you wanted to but if there’s no beaches and no waterways and no inlets, I’m not sure it would do you any good.”

Davis said he is open to any citizen input on reform of the ROT guidelines after the short session ends and before the long session begins.

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